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What If.......CO + UA .."DO the deal" ?
- Thread starter NewHampshire Black Bears
- Start date
Nor'Easta
Veteran
- Mar 8, 2006
- 510
- 1
I think AA will try to bid for NWA. Remember Carty tried to buy NWA before TWA and the offer was not enough. Yes, AA's debt is HUGE but we do have $5.5 Billion cash on hand.
Airline analysts say the AA/NW and UA/CO are the perfect matches. Due to very little route overlap it would be a good fit. Yes, NW has Airbus 319/320 (use on a temp basis to replace the MD-80's) and DC-9's (park them). The B747-4 and A330's can be used on long haul. The 747-4 to LHR, EZE, GRU, GIG and NRT and the A330 to Europe. This would free up some 777's and the 767-3 for other routes.
JMHO
Airline analysts say the AA/NW and UA/CO are the perfect matches. Due to very little route overlap it would be a good fit. Yes, NW has Airbus 319/320 (use on a temp basis to replace the MD-80's) and DC-9's (park them). The B747-4 and A330's can be used on long haul. The 747-4 to LHR, EZE, GRU, GIG and NRT and the A330 to Europe. This would free up some 777's and the 767-3 for other routes.
JMHO
777 fixer
Veteran
- Jul 21, 2004
- 4,792
- 900
Replacing NWA's 747 and A330's would require thirty seven 777's. That's not something you do in two years.
True, but I'm not convinced that AA would "replace" all the airplanes. Not right away, and probably not ever. As has been posted before, AA wouldn't be buying NW to get tons of AMS flights or other open skies routes, so it likely wouldn't need all those airplanes.
AA wouldn't be buying NW to get "bigger." AA would be buying NW to get access to China and the NRT hub. AA could keep the 744s around for a while (despite its ingrained dislike for four-engined airplanes) and could even keep some of the A330s around until they could be replaced with 777s.
Consolidation is gonna mean some serious downsizing among the legacies. I would expect that NW's ASMs would drop by a substantial percentage following any acquisition.
And for the dreamers out there - if AA operated the 744s (and the 742 freighters) for a while, perhaps it would come to appreciate the 747 again - leading to an order for a few dozen 747-8s. B)
donttouchthebeauty
Veteran
- Jan 11, 2006
- 545
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AA should do nothing other than stay the course and continue to strengthen its balance sheet and seek new opportunities for growth in its existing hub network. The last acquisition nearly forced American into bankruptcy - there's nothing prsently on the table that makes the risk of ending up near (or worse, in) bankruptcy worthwhile in the pursuit of a merger.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #67
Thank you, avek.
Even though some people get real excited about mergers, they will only happen when there is a compelling combination that would provide benefits that far exceed what either airline could do on its own.
AA has the resources to replace a big chunk of its MD80 fleet with cash right now which would probably cut AA's fuel bill substantially but they are not. They also have the cash to buy enough 787s or 777LRs to connect any two points in the world but they are not. AA is moving cautiously and is at a cost disadvantage but certainly not one that will cripple it. Airlines with a cost disadvantage can rarely make a case that an acquisition will improve their financial performance.
No other airline is on the verge of failure which is what will undoubtedly precipitate consolidation. Despite everyone's assertion that there are too many hubs in the US, all indications are that most of the hubs which have been shrunk are now making money and carriers have been able to reroute remaining traffic over the rest of its network.
UA is building its east coast presence including to Asia while DL is building in the west and CO continues to grow into Asia. NW will undoubtedly use its 787s to begin overflying NRT which will put them on a very solid basis to compete with UA and to a lesser extent AA and CO to Asia. There is no indication that any carrier intends to give up their singleness or that they can't fix some of their structural problems on their own.
I predict that NW will be completely rid of its DC9 fleet by the time a merger actually becomes reality. By that point, we might see a new 100-125 seat offering from Boeing that could be so compelling that it becomes the replacement for the the MD80s at AA and DL, the DC9s at NW, and the the 737 classics at CO and UA. That plane alone might move fleet commonality among US carriers along substantially, which could certainly facilitate mergers.
Even though some people get real excited about mergers, they will only happen when there is a compelling combination that would provide benefits that far exceed what either airline could do on its own.
AA has the resources to replace a big chunk of its MD80 fleet with cash right now which would probably cut AA's fuel bill substantially but they are not. They also have the cash to buy enough 787s or 777LRs to connect any two points in the world but they are not. AA is moving cautiously and is at a cost disadvantage but certainly not one that will cripple it. Airlines with a cost disadvantage can rarely make a case that an acquisition will improve their financial performance.
No other airline is on the verge of failure which is what will undoubtedly precipitate consolidation. Despite everyone's assertion that there are too many hubs in the US, all indications are that most of the hubs which have been shrunk are now making money and carriers have been able to reroute remaining traffic over the rest of its network.
UA is building its east coast presence including to Asia while DL is building in the west and CO continues to grow into Asia. NW will undoubtedly use its 787s to begin overflying NRT which will put them on a very solid basis to compete with UA and to a lesser extent AA and CO to Asia. There is no indication that any carrier intends to give up their singleness or that they can't fix some of their structural problems on their own.
I predict that NW will be completely rid of its DC9 fleet by the time a merger actually becomes reality. By that point, we might see a new 100-125 seat offering from Boeing that could be so compelling that it becomes the replacement for the the MD80s at AA and DL, the DC9s at NW, and the the 737 classics at CO and UA. That plane alone might move fleet commonality among US carriers along substantially, which could certainly facilitate mergers.
OP
NewHampshire Black Bears
Veteran
- Aug 20, 2002
- 10,154
- 681
- Thread Starter
- Thread starter
- #68
A lot of opinions, and thats OK.
BUT,..(And this goes to my original question)
"WHAT" will AA do, ............"IF" UA and CO "do the deal"
Lets start with YOU...World traveler !!
(And YES, you DON'T need FLY to make a post, so YOU :blink: can then sneak up
h34r: /post,right BEHIND her)
NH/BB's
BUT,..(And this goes to my original question)
"WHAT" will AA do, ............"IF" UA and CO "do the deal"
Lets start with YOU...World traveler !!
(And YES, you DON'T need FLY to make a post, so YOU :blink: can then sneak up
h34r: /post,right BEHIND her)NH/BB's
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #69
she's nowhere to be seen.
AA should do what I've been saying all along regardless of whether UA or CO do a deal. AA should build its own Pacific presence on its own with its own very large 777 fleet... and then buy a few 787s or 777LRs if they think they need more range. AA has a strong presence in ORD, LAX, SFO, and JFK, all major gateways to Asia. If AA can't manage to make Asia work from its own hubs and strength markets, then buying NW won't help unless all AA thinks they can do is connect passengers through NRT. If that is all they want, they will be way overpaying for a route system that is already out of date. Even NW recognizes that the industry is moving beyond NRT connections so they have ordered the 787 which will allow NW to overfly NRT. AA's hubs are undeniably stronger than NW's. AA needs to build its own Asian route system and they need to quit waiting around for someone else's to become available to buy.
AA should do what I've been saying all along regardless of whether UA or CO do a deal. AA should build its own Pacific presence on its own with its own very large 777 fleet... and then buy a few 787s or 777LRs if they think they need more range. AA has a strong presence in ORD, LAX, SFO, and JFK, all major gateways to Asia. If AA can't manage to make Asia work from its own hubs and strength markets, then buying NW won't help unless all AA thinks they can do is connect passengers through NRT. If that is all they want, they will be way overpaying for a route system that is already out of date. Even NW recognizes that the industry is moving beyond NRT connections so they have ordered the 787 which will allow NW to overfly NRT. AA's hubs are undeniably stronger than NW's. AA needs to build its own Asian route system and they need to quit waiting around for someone else's to become available to buy.
RowUnderDCA
Veteran
- Oct 6, 2002
- 2,123
- 1
Other than wishful thinking and the AMR interests from over 5 years ago, is there any indication that AA management is looking to merge with NW or purchase its asia routes? I hear nothing of it except on USAviation.
Wish-posting is fine, but some of us don't have any wishes.
Wish-posting is fine, but some of us don't have any wishes.
OP
NewHampshire Black Bears
Veteran
- Aug 20, 2002
- 10,154
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- Thread Starter
- Thread starter
- #71
NOW, a "different twist" !!
What IF NW saw that UA and CO were about to become a reality, "What would/could NW do" ????
I'm starting to think that mabey NW would'nt just "sit quietly by", while UA "grabbed" CO(or visa versa)
One thing is VERY certain.
NO potential "match up" is a better fit, than BIG RED and Continental !!! They have virtually no route overlap.
In other words, NW may want to "go it alone", ...BUT.... could be forced to act(as far as CO is concerned), rather than let CO, go with another carrier.
I just keep thinking about NW's "first right of refusal"(about CO). I'm guessing the reason NW and CO are Soooooo "closely knitted" in a lot of ways, was done for a reason !!
????????????
NH/BB's
What IF NW saw that UA and CO were about to become a reality, "What would/could NW do" ????
I'm starting to think that mabey NW would'nt just "sit quietly by", while UA "grabbed" CO(or visa versa)
One thing is VERY certain.
NO potential "match up" is a better fit, than BIG RED and Continental !!! They have virtually no route overlap.
In other words, NW may want to "go it alone", ...BUT.... could be forced to act(as far as CO is concerned), rather than let CO, go with another carrier.
I just keep thinking about NW's "first right of refusal"(about CO). I'm guessing the reason NW and CO are Soooooo "closely knitted" in a lot of ways, was done for a reason !!
????????????
NH/BB's
lpbrian
Veteran
- Mar 7, 2004
- 687
- 105
One scenario involving NW I can envision is a joint purchase of NWA. A group of 3 carriers, say AA, USAirways and FedEX buying NW, and then breaking it up. FedEx taking the cargo division, AA taking the Pacific routes and USAirways taking the rest. It would make sense for USAirways; more atlantic routes and compatible A/C. Close MEM, downsize MSP and keep DTW. Not likely to happen, but it sems plausible.
SoftLanding
Senior
- Jul 25, 2005
- 255
- 1
Now this is something that could happen. But with the cost reductions that's being implemented, Northwest's overall cost should be very low...And their route structure is solid, especially the Far East and European routes, and the DTW hub.
The insiders and the big money guys would not be keen on this though, as they're all looking for bigger $$$ after an initial public offering (IPO). Just look at the management team of US Airways, it's easy to see who's benefitting...(The biggest initial investor(s) is(are) still sitting on their shares.)
AMR is solid as a rock, and they can expand anywhere, (just about), and I believe they would only step in to buy parts of an airline, or be more aggressive if one of their major compepitors would try to invade their turf by way of a merger/buy-out.
US Airways' Parker is talking a lot, but let's remember, he has major negotiations to deal with. Seems like many of our (US Airways) pilots are drooling, seeing themselves in B747-400's soon...(I'm not kidding!). This talk from Parker, with the help from the analysts/investment houses/media, it makes for interesting cockpit discussions, that's about all.
My overall take: No legacy mergers, period! If anything, look for smaller targets...Alaska, AirTran, jetBlue...
SoftLanding
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- Banned
- #75
NW has the right to develop its own plan of reorganization and it is doubtful that they would devise one that involves selling the company or carving it up - unless that produces higher returns to the creditors - which mergers and acquisitions usually do not because the FUTURE value of the firm is enough to keep it alive. Selling it today means settling for the current vavlue.
