Word is AA/US have settled with the DOJ

[Black Magic]

I don't even bother reading WT's exasperating posts anymore.  Nobody banged the drum louder than him about how AA-US CANNOT and WILL NOT merge!  And now here we are today proving his statement is false.  He should have more concerns now that CLT and MIA are going to lay the smackdown on ATL.

 

[MetalMover]

Everyone needs to read his rants on the Delta board....
He's in denial even over there.

 

[WorldTraveler]

I don't even bother reading WT's exasperating posts anymore. Nobody banged the drum louder than him about how AA-US CANNOT and WILL NOT merge! And now here we are today proving his statement is false. He should have more concerns now that CLT and MIA are going to lay the smackdown on ATL.

the fact that you think that an airline that will have costs 10% higher than DL is going to SMACKDOWN ATL shows how little you truly understand about the industry.

I did not say that AA and US would not merge. IN fact, I said just the opposite... that there was no basis for the DOJ saying that the merger couldn't be fixed w/ some amount of remedy.

But I also said that the merger SHOULD NOT happen because AA would pay a very high price for it. AA had done the hard work of restructuring but US would benefit from AA's revenues. This merger was all about saving US' butt in the long run. AA could have made it if they had address their strategic challenges. US' entire network and business plan was coming to an end.

Now, AA and US' futures both will be negatively impacted in part because they paid such a huge price to get the merger done.

If you don't understand it now, you won't.

"Mike Boyd, Gordon Bethune, Wall Street Journal, Raymond James Financial analysts, JP Morgan Chase analysts, and several others seem to disagree."

You dismiss them out of hand?

Those are some pretty successful airline analysts who do it more than just a "hobby" as you say you do. They actually get paid to be impartial and balanced.

So those listed by USFlyer are all wrong and you are correct. Got it. I guess we are all done here then.

Tell me when you saw any of those analysts call a merger a bad idea.

You do realize they work for companies that stand to make a lot of money in the new AA/US and aren't about to call spades what they really are?

There are no impartial people on Wall Street esp. when it comes to big deals like this.

Your foolishness shows by even suggesting that they might exist.

 

[Black Magic]

the fact that you think that an airline that will have costs 10% higher than DL is going to SMACKDOWN ATL shows how little you truly understand about the industry.

I did not say that AA and US would not merge. IN fact, I said just the opposite... that there was no basis for the DOJ saying that the merger couldn't be fixed w/ some amount of remedy.

But I also said that the merger SHOULD NOT happen because AA would pay a very high price for it. AA had done the hard work of restructuring but US would benefit from AA's revenues. This merger was all about saving US' butt in the long run. AA could have made it if they had address their strategic challenges. US' entire network and business plan was coming to an end.

Now, AA and US' futures both will be negatively impacted in part because they paid such a huge price to get the merger done.

If you don't understand it now, you won't.


Tell me when you saw any of those analysts call a merger a bad idea.

You do realize they work for companies that stand to make a lot of money in the new AA/US and aren't about to call spades what they really are?

There are no impartial people on Wall Street esp. when it comes to big deals like this.

Your foolishness shows by even suggesting that they might exist.
 
 

 
Blah blah blah WT...Ain't nobody got time for that!  Make no mistake people this guy even offered everyone on the forums a $20 gift certificate bet of your choice with him that AA/US wouldn't merge.  One poster took him up on the offer.  Did you make good on your bet WT?

 

[IORFA]

HA, bet he didn't.

 

[Kev3188]

...Ain't nobody got time for that!

Lol.

'Bout time that got worked into a thread here...

 

[Glenn Quagmire]

There are no impartial people on Wall Street esp. when it comes to big deals like this.Your foolishness shows by even suggesting that they might exist.

Your impartiality comes shining through on each and every post.

My foolishness. Meh.

Look in the mirror WT, you will see what all here see:



World Traveler in all his glory!

 

[jimntx]

Instead of ridiculing WT, why don't some of you rah-rah pro-merger folks come up with some facts that prove him wrong? DP is not only noted for doing things on the cheap, he's also noted for breaking promises made to his employees. You all think that everything will be peachy keen if we just get rid of Tom Horton. We'll see, won't we?

 

[Glenn Quagmire]

Instead of ridiculing WT, why don't some of you rah-rah pro-merger folks come up with some facts that prove him wrong? DP is not only noted for doing things on the cheap, he's also noted for breaking promises made to his employees. You all think that everything will be peachy keen if we just get rid of Tom Horton. We'll see, won't we?

I also never thought the merger would go through.

I will not get into the DP comparison to the RA and company.

 

[AANOTOK]

Fact - They merged...get over it!

 

[Black Magic]

 
Probably not….
According to the most recent quarterly filings, AA’s non-fuel costs were 32% higher than B6’s. The chance of being able to reduce costs 32% by the time it emerges from BK is slim to impossible without a significant change in the business model. If AA guts its employee costs and contracts out most of its maintenance on top of replacing the vast majority of its fleet, it is conceivable to reduce its costs 30% relative to today within 3-5 years. But in order to do that, AA’s debt levels will go through the roof – and that is the real concern long-term. It is possible to reduce costs low enough but that comes at a high price to the balance sheet. I don’t believe the creditors will allow AA to take on that much debt when it could pass its network competitors with a smaller 20% cut in costs – which probably does not require replacing 450 aircraft, but probably closer to 250.
Note that AA’s costs per ASM ex-fuel are presently about 18% higher than DL’s but only about 10% higher than UA’s and a bit more than US. Note than DL’s CASM is lower than WN’s so even if AA reaches DL’s CASM, it would have lower CASM’s than both traditional archrival UA as well as WN which will be attempting to gain the Dallas/Ft. Worth as the Wright Amendment ends.
AA 9.05
DL 7.35
UA 8.15
US 8.06
WN 7.5
B6 6.43

There is no reason for AA to attempt to bring costs down to B6’s level, and B6’s costs will go up as its workforce ages, in the same way that has happened with WN.

The whole notion that AA would merge with US is also highly unlikely when you consider that in order to bring costs down to DL’s levels – and AA cannot afford to come out of BK w/ a CASM higher than any of its nationwide competitors – DL, UA, or WN – AA would be merging with a carrier that has a HIGHER CASM – not exactly a smart decision after all the efforts it will take to get AA’s costs down.
Even considering DL’s longer haul network, US’ costs are more than 5% higher than DL’s – which is also why notions that US can succeed in a market share contest against DL are erroneous.
While some here think that my faith in DL is overzealous, you need only look at DL’s CASM relative to the industry to realize why DL has been able to defend its markets and gain market share from so many competitors.
AA has to be at least in a position to match the CASM of its lowest big 3 competitor.
.
As to the question of which carrier – US or B6 adds more strategic value to AA, the real question will be what the competitive situation looks like when AA emerges and what other carriers have done strategically during AA’s BK.
Let’s not forget that DL has for all practical purposes finished its merger with NW while UA and WN will be working through theirs for at least the next six months or more on labor and network integration and probably a lot longer than that. DL’s strategic aggressiveness over the past 5 years and its relatively strong financials leave it positioned to fix whatever it feels it needs to do strategically and those moves in all likelihood will be focused on AA and US much more so than UA – and the highest likelihood of actions will focus on LHR or Latin America. There are strategically important international markets in which either DL or UA could acquire carriers or implement strategic initiatives that would make it very difficult for AA to succeed in whatever plans it might implement.
If B6 were so certain they would merge with AA, they would likely not have spent $70 on slots at LGA and DCA, where AA will still hold significant slot holdings.
AS and VX are both still AA competitors and have growth plans that could intersect w/ cuts AA will have to make or add service in markets where AA has strength.
WN and UA are certainly not going to sit still competitively even during their merger integration.
.
The bottom line is that it is impossible to predict what will have competitively in the next 18 months when AA will have limited ability to respond but when it will still have a high degree of control over its destiny.
.
Predicting that US will acquire AA is full of reasons why it makes no sense – and CASM relative to the industry is yet one more.
.
We can all speculate for 18 months what will happen but I will go on record – and put cash on the line to say that US will not succeed in acquiring AA at least during the next 18 months – and probably for a much longer term.
I invite anyone that is so certain that US will succeed to agree to the same terms I offer: If AA is acquired during the next 18 months while it remains in BK, I will send a $25 gift card of their choice to the first 10 people who will agree to the same terms and do so by December 7, 2011.
.
Anyone who is so certain about their position should be willing to back it up.

 
Member Etops1 took him up on the deal.  Maybe he can chime in 

 

[Glenn Quagmire]

Oops. Gauntlet thrown down.

 

[WorldTraveler]

no, he has not claimed his prize.

BTW, did you happen to read the terms of what I wrote?

I said that there would be no merger involving AA in the 18 months following its BK. We are now approaching the two year mark and AA is still a separate company.

Appears that WT was right after all.

Looks like the OOPS belongs to me over those who were so quick to declare victory that they didn't even bother to read the terms of the deal!

Now you wonder why I love going back to look at historical threads?

 

Fact - They merged...get over it!

I'm over it... it is the people who can't accept that just because the merger was approved doesn't equate to victory in the marketplace .. and that is what ultimately matters.

AA and US have each spent 10 years trying to survive, have each made huge strategic failures, and yet now want to tell us that they are going to conquer all because they are now 1.

Some of us aren't convinced and don't think it is asking too much to expect those people to deal with the realities that really exist.
 

Instead of ridiculing WT, why don't some of you rah-rah pro-merger folks come up with some facts that prove him wrong? DP is not only noted for doing things on the cheap, he's also noted for breaking promises made to his employees. You all think that everything will be peachy keen if we just get rid of Tom Horton. We'll see, won't we?

Jim,
please. We're dealing with the soiled masses who fall into line behind their masters... they don't want to think and a lot of them don't even know how to.
And when someone comes along asking them to think and challenging them with facts and realities, they grow hostile.

The best part is that it will take very little time before the house of cards starts falling and I'll be here to document it for those who were so quick to condemn my assessment.

Did you also notice the CASMs I cited back then. 2 years later, DL still has a CASM advantage over its network airline peers.

Apparently the pay raises which DL has given to its employees has pushed DL's CASM up over WN's since DL doesn't have that advantage over WN now - lost it by 1%.
WN's employees haven't received anywhere near the kinds of pay raises that DL employees have.

 

[cltrat]

yes we are all aware you're not convinced ,fine everyone has an opinion.
Is it necessary to have the same argument in a half dozen threads between the AA/US forums.
We get it time will tell if you are right
as brought up you were wrong about the merger but we'll see, personally I'm tired of reading it in so many threads.

 

[WorldTraveler]

when there are a half dozen people here who have just made fools out of themselves because they were so quick to say that I was wrong despite the fact that I indeed have won the bet,

you better believe there is reason to post it about 25 times per day on a dozen threads.

For the very same reason that the same people who have tried to discredit me are doing so on as many threads.

I was right, they were wrong.

It's pretty simple. Few people on these forums understand the business of the airline industry and are quick to throw stones.

I'm here to throw them back with expectations for an explanation.